Customer-Obsessed Leadership

Only “customer-obsessed leaders” can create customer-centric companies. There are many great examples of these types of leaders including Walt Disney, Howard Schulz of Starbucks, Jeff Bezos of Amazon, Tony Hsieh of Zappos, Horst Schulze of Ritz Carlton and countless others. Each of these leaders have very different businesses and often very different customers. They do, however, all share the same unwavering understanding that customers are the most critical asset in business. The leaders of some of today’s most successful homebuilding companies also share a similar passion with these customer-obsessed leaders from other industries. Customer-centric homebuilders have leveraged the customer experience as a key differentiator from the competition and the effort is generating great returns.

Working Outside-In

While many traditional companies tend to work from the “inside-out,” companies that are true customer experience leaders build products and design processes working from the “outside-in.” Many traditional companies strategize from behind closed board room doors on how to improve products or processes. Those companies then move outwards to broadcast those ideas to customers with the hope of uptake and success. To work from the “outside-in” means involving or even collaborating with customers and then taking the heightened understanding of customer needs back into product and process development.

Keeping profound customer needs in the crosshairs of every business decision is what differentiates many successful companies from their competitors. The leaders of these types of companies recognize that this feat requires more than just assembling a team willing to listen to customers. It takes a company culture that craves to truly understand customers.

The “Empty Chair”

There are few business leaders more obsessive when it comes to serving customers than Jeff Bezos, Founder and CEO of Amazon. Bezos is passionate about customers and works relentlessly to foster a company culture that shares his passion. Bezos is well known for leaving one seat open around the table in a meeting and letting all participants know that seat is for their customer, “the most important person in the room.” This “empty chair” example has been discussed in numerous articles and interviews about Amazon and illustrates just one of the differences in the Amazon-way of thinking.

Nevertheless, it takes much more than just symbolic gestures or kindhearted mission statements to create a customer-centric culture in a company. It takes leadership, commitment and meticulous practice. Amazon is reputed to require all employees and managers, including Bezos, to spend two days per year in call-centre training. The objective is to provide each team member with front-line exposure to customers to help develop an increased understanding of customer needs throughout the company. That front-line exposure and enhanced customer understanding then flows back into each area of the company. These types of activities help to infuse Amazon’s decision-making process with “customer desires.” Several progressive homebuilders have adopted similar practices and have all team members spend time in customer-facing roles to enhance customer empathy within the company.

People Passion

“When you’re surrounded by people who share a passionate commitment around a common purpose, anything is possible,” according to Howard Schultz, Chairman and CEO of Starbucks. Loyalty leaders have found a way to convey a vision, create a passionate team and nurture an environment for synergy ─ where the whole is greater than the sum of the parts.

Some common beliefs and practices shared by many customer-obsessed leaders include:

  • Focus on the “why” of the company more than the “what”
  • Hire, train, reward and promote customer-obsessed employees and managers
  • Measure to manage ─ metrics are vital
  • Trust front-line employees to take care of customers
  • Empower front-line employees to do what’s right for customers
  • Provide real-time feedback to all employees
  • Share and celebrate customer success stories openly and often

Customer Obsession Delivers Returns

“You can design and create and build the most wonderful place in the world. But it takes people to make the dream a reality,” according to Walt Disney. Disney was a true pioneer in customer-obsessed leadership and many other leaders have followed that path. These bold leaders have proven that customer-obsessed leadership not only results in increased customer satisfaction, but it also delivers tremendous returns.

Tim Bailey is Division President of Avid Ratings Canada, a leading provider of customer loyalty research and consulting to the homebuilding industry. Through the Avid system, industry-leading clients improve referrals, reduce warranty costs, and strengthen their brand. He can be reached at tim.bailey@avidratings.ca.

That Peaceful Easy Feeling

How easy is it for customers to do business with your company? Reducing customer effort is an important part of creating a positive customer experience. A fundamental reason that businesses exist is that they solve problems for customers. Economies of scale, expertise, and efficiencies furnished by businesses provide various solutions to consumers, such as availability, lower prices, faster production, better design, improved quality, and more.

Home Problem Solvers
Home builders solve problems for home buyers every day. For example, homeowners may be outgrowing an existing home due to a growing family. Or maybe a work relocation is creating the challenge of finding a home in a new city. Or perhaps empty-nesters are faced with the dilemma of down-sizing to a smaller home to free-up equity for retirement. Regardless of the “shelter-related” problem, home builders can provide solutions for customers.

In the process of resolving their home-related problems, however, some home buyers complain of being burdened with a host of different problems during their new home journey. Are the complications and complexities of home building tidily hidden “backstage” in order to make the customer-facing aspects as easy as possible? Few would suggest that home building is easy, but the magic comes from making a customer’s journey feel that way.

How it Feels to be a Customer
Purchasing decisions are made based on a company’s reputable brand, quality product, great value, or a combination of attributes. Customer memories, however, come from how it “feels” to do business with a company. “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel,” according to prolific writer Maya Angelou. How does it “feel” to be a customer of your business? This is an important question because customers remember that “feeling” and it impacts their long-term loyalty.

Is it an arduous journey to be a customer with your company? Whether the answer is yes, no or maybe, it is a valuable exercise to regularly review your customer’s journey ─ closely examining the journey to find any ways to make it easier to do business with your company.

Find the Friction
Analyzing the customer journey means examining every customer touch-point in terms of process, people, policies, product, and communication. The objective is to uncover any friction currently present in those touch-points which may be causing additional customer effort. After unearthing those pain-points, it is then necessary to implement solutions to smooth out each touch-point. These improved touch-points can then be “stitched” together to enable a holistic review of the entire customer experience to ensure that customer effort is minimized throughout the journey.

Some valuable sources of information which can help builders “find the friction” in the customer experience include:

  • Front-line team members: Those closest to the customers have a wealth of knowledge on areas of customer frustration.
  • Trades & suppliers: As an extension of a builder’s team, trades and suppliers often have important insight regarding measures that may be creating unnecessary customer effort.
  • Communication channels: Recurring themes in emails and phone calls, or most-frequented sites on digital channels can reveal areas of customer frustration.
  • Dissatisfied customers: Unhappy customers can provide valuable feedback regarding high-effort areas in their customer experience.

Make it Easy
Building a customer journey that reduces customer effort means removing obstacles or barriers in processes. It also means having a team that is able to understand the personal and emotional needs of each customer and connect at that level. Communication channels must also be in place to cater to the uniqueness of every customer ─ there is no one-size-fits-all communication channel to satisfy today’s consumers. Most importantly, an environment of continuous improvement must be encouraged in order to learn from mistakes and use that knowledge to head-off problems for future customers.

Mike Wittenstein is retail customer experience strategist and designer at Storyminers and he sums things up succinctly with the following equation:

Keeping this equation in the positive means ensuring that everything a builder does “for” a customer is greater than what is done “to” a customer during the new home journey. There is nothing more powerful for business success than a mass of customers that feel great about their experience.

Tim Bailey is Division President of Avid Ratings Canada, a leading provider of customer loyalty research and consulting to the home building industry. Through the Avid system, industry-leading clients improve referrals, reduce warranty costs, and strengthen their brand. He can be reached at tim.bailey@avidratings.ca.

Maximizing Referrals

Success in homebuilding tends to vary by market area in today’s industry. In weak markets, success may be the ability to reposition for market uncertainty. In areas of mediocre market activity, builders that are maintaining or gaining market share may be the models of success. In robust markets, success may mean keeping pace without suffering customer experience chaos. Regardless of market conditions, all homebuilders can accelerate success by focusing on highly qualified prospects.

The No-Cost Conversion Increase
Advertising and marketing are crucial for attracting new customers, however, there is a way to significantly increase the conversion rate of prospects into actual homebuyers and it doesn’t involve a single advertising dollar. The secret is “maximizing referrals” and as obvious as that sounds, it requires innovative systems and processes.

Many homebuilders have sales teams trained to ask prospects how they heard about the builder. Typically, this information is used to determine the effectiveness of various marketing channels, such as social media, print media and other advertising. When prospects mention that they were referred by a friend or family member, that fact may be noted but it often dies there. However, this information is some of the most valuable information for a sales team to leverage.

Profitable Prospects
The reality is that not every prospect has the same likelihood of buying. A marketed prospect who has done minimal research before visiting a sales center is at the earliest point in the buying cycle. Comparatively, a prospect who has researched a builder’s marketing, website, online reviews and more, is likely to be further along in the buying cycle. But the prospects who are most likely to buy are those who have been referred by family or friends. Referrals are “third party endorsements” that create the most cost-efficient, profitable and loyal sources of new business. Referral business delivers the highest return on investment by reducing sales expenses and shortening sales cycles. Based on research conducted by Avid Ratings, referral prospects are twice as likely to make a purchase within six months versus marketed prospects. One particular builder even found the conversion rate of referred prospects to be three times higher than marketed prospects.

The closing ratio for non-qualified leads is 10 percent, versus 60 percent with referred leads, according to sales trainer and author Tom Hopkins. This reinforces the argument that investing resources into identifying and servicing referred prospects will provide big returns. Top-performing builders in customer satisfaction are best positioned to focus on referred prospects and reap the higher conversions that result and this comes down to three simple steps.

Step One – Identification
The first step is to utilize a detailed tracking system for referrals. Not only tracking which prospects were referred but also who referred them, when the referral took place and other key details. The power of today’s CRM software products make this task rudimentary, yet it is surprising how many builders fail to collect, compile and leverage this critical information.

Step Two – Sales Strategy
Even the most thorough information still needs to be acted on and timeliness is critical. Hundreds of thousands of dollars may be sitting unrealized in CRM data unless a sales team is acting quickly and executing a sound strategy. It takes a specific plan to deal with high-priority referred prospects. This plan is different than one used for other prospects because referred prospects typically have heightened knowledge and trust. Referred prospects come in the door because someone close sent them. Personalizing communications can occur more quickly and mentioning the “referrer” in conversations will help to strengthen the relationship. Not all referred prospects will generate immediate business but they all have higher potential.

Step Three – Increasing Referral Traffic
After ensuring that a sound system and strategy is in place for referred prospects, the goal is to increase the amount of referrals coming in the door. Having tools that can identify which past customers are “promoter” customers is indispensable. From there, specific strategies can be developed such as incentive programs to referrers or those referred. There may also be opportunities to create “events” that provide venues for happy homeowners to connect with prospects. Many homeowners want to recommend their builder and creating opportunities for that to occur pays big dividends. 

Be Referable
Referred prospects are a significant source of business for leading builders and “being referable” is vital. That means building quality homes, providing exceptional customer service and creating outstanding homeownership experiences long after the possession date. With those building blocks in place, maximizing referrals becomes the game-changer in any market conditions.

Tim Bailey is Division President of Avid Ratings Canada, a leading provider of customer loyalty research and consulting to the homebuilding industry. Through the Avid system, industry-leading clients improve referrals, reduce warranty costs, and strengthen their brand. He can be reached at tim.bailey@avidratings.ca.

 

Crossing Home Plate

by: Tim Bailey, Division President of Avid Ratings Canada

Building homes means managing hundreds of processes, while assembling thousands of components made from a combination of natural, manufactured, pre-fabricated and human-assembled materials. The construction process spans several months, in conditions that may include scorching heat, drenching rain, gusting winds, frigid snow or anything in-between. It is not surprising that Dr. Jack B. ReVelle, Six Sigma expert and quality guru, has noted that “the average home has more than 60,000 points of failure during the building process.” Building homes is not an easy sport.

Stopping at Third Base
In light of the complexities of home building, it seems reasonable to think that making it to closing with only a handful of incomplete or deficient items should be considered a victory. Unfortunately, homebuyers rarely look at what has been accomplished, but rather, what remains incomplete when they receive keys for their new home. A builder with a short list of deficiencies at occupancy may view that as a “win,” but most homebuyers score that less generously in customer satisfaction. “Stopping at third adds no more to the score than striking out. It doesn’t matter how well you start if you fail to finish,” according to legendary major league baseball player Billy Sunday.

On the scoreboard of customer satisfaction, two key elements are in play when buyers take possession of their new homes: The first is the “number” of deficiencies and the second is how homebuyers “perceive” that number. Even the best builders “leave runners on third” at times, but customer satisfaction leaders score higher by managing customer expectations while turning over homes with few, if any, shortcomings.

Number of Incomplete Items
Survey data from Avid Ratings’ “All-Canada” database indicates 22.2 percent of homebuyers reported having “three or fewer” deficiencies at the time of their pre-delivery walk-through, with 2.6 percent of those buyers reporting zero deficiencies. Hopefully the goal for all home builders is to have zero deficiencies by closing ─ or preferably by the pre-delivery walk-through ─ however, this data suggests that 97.4 percent of homebuyers report some deficient items at their walk-through.

In comparison, data from an industry-leading builder in customer satisfaction shows that 55.3 percent of their homebuyers reported having “three or fewer” deficiencies at their walk-through ─ 33.1 percent better than the “All-Canada” data above ─ with 6.4 percent of their buyers reporting zero deficiencies. A good batting average in baseball is typically above .300 and similarly, while leading builders are not perfect, they are batting at higher averages in the delivery of deficiency-free homes.

Perception is Reality
Setting expectations for homebuyers is a key factor in customer satisfaction, as customer perceptions become reality. Homebuyer perception regarding deficiencies at the walk-through is crucial to monitor and understand. Survey data from Avid Ratings’ “All-Canada” database indicates 71.8 percent of homebuyers believe the number of deficiencies at their walk-through was either “about as expected” or “less than expected/no items.” This leaves 28.2 percent of homebuyers feeling that the number of deficiencies at their walk-through was “more than expected” or “much more than expected.”

Again in comparison, data from an industry-leading builder in customer satisfaction shows that 85.4 percent of their homebuyers believe the number of deficiencies at their walk-through was either “about as expected” or “less than expected/no items” ─ 13.6 percent better than the “All-Canada” data above. This leaves 14.6 percent of their homebuyers feeling that the number of deficiencies at the walk-through was “more than expected” ─ no homebuyers reported “much more than expected.” Even the best builders are not hitting home runs every time they are setting customer expectations, but they are generally leading the league in this area.

Finishing Strong
Managing the complexities of homebuilding should bring the reward of homeowners that are passionate fans, but this is only possible if customers receive complete and ready homes that align with their expectations. Turning over homes with few, if any, deficiencies shows up on the scoreboard through referrals and positive reviews. Finishing is always the most important part of the race.

Optimize 3Ps to Create Outstanding CX

By: Tim Bailey – Division President of Avid Ratings Canada and Paul Cardis – CEO and Founder of Avid Ratings

There are proven business initiatives that generate profound results and home builders may employ one or more of these initiatives, such as Lean, Six Sigma, or Kaizen, to stay the course towards sustained excellence. Lean initiatives help reduce waste and inefficiencies. Six Sigma practices reduce defects and deficiencies. Kaizen maintains a focus on continual improvement. The core building blocks of all business improvement initiatives are People, Product, and Process. Understanding the interactions of these 3Ps is essential to CX — the customer experience.

People
A key ingredient in a successful organization is the people. The collective knowledge, attitude, aptitude, and level of genuine caring has a tremendous impact on the success of the organization. Having the right people only solves part of the equation, as they must also be aligned to the right roles. A highly skilled construction manager who consistently exceeds time, quality, and budget objectives, but falls short with customer-facing interactions, should either be provided with thorough training to help excel at customer interactions or be buffered from those situations in order to leverage what he or she does best for the company. Hammering a square peg into a round hole does not create solutions, only friction. Recognizing key strengths of individuals and aligning these strengths with respective roles and responsibilities will maximize success.

Comprehensive and ongoing training will always generate a significant return on investment. Acquired skills and knowledge better equip team members to be trusted and empowered. An organization is only able to scale successfully if people are afforded the trust and authority to make decisions within their area of responsibility. It is important to remember that trades and suppliers form a substantial percentage and integral part of the “people” for a home builder, and must therefore be considered part of that detail in the 3Ps blueprint.

Product
The best people and processes cannot be successful if the product misses the mark. In home building, “product” includes factors such as design, specifications, location, and price. Achieving a successful “product-market fit” is the goal, and fortunately there is a vast amount of data that can be leveraged to ensure product-market fit is not left to chance. Home builders are not building structures, but providing “solutions”. Intimately understanding the needs of home buyers in a target market allows product to be brought to market that meets those needs and provides those solutions.

Product design must consider demographic, ethnographic, psychographic, and economic information for a target market. Home building is a high-stakes industry and including features or specifications that are not valued by a target market adds unnecessary costs. Designing a product that “checks all the boxes” for the target market will maximize value for customers, increase sales velocity, and improve margins.

Process
A well-intentioned team and market-matched product will not be able to succeed without a sound process. “A bad system will beat a good person every time,” according to quality expert W. Edwards Deming. A good process is repeatable, scalable, efficient, and constantly improving. Auditing the current process in home building means digging deep into every area of the company. It is a significant undertaking but reaps great rewards. Process analysis unearths existing bottlenecks, non-value-added stages, inefficiencies, and waste. Layering the customer journey over that process exposes potential “friction points” and allows the process to be engineered to enhance the customer experience.

The effects of process deficiencies are often easy to spot, but identifying root causes is what facilitates improvement. A root cause exercise of “5 Whys” is a common practice in Lean, Six Sigma, and Kaizen methodologies. It involves digging deep into a negative effect by asking a series of “why” questions five times. The answer from each “why” forms the next question and the fifth “why” generally exposes a root cause.

Using 3Ps for CX
The customer experience is at the core between the interactions of people, product, and process. To “manage with metrics” to optimize the 3Ps, leading companies rely on:

  • Employee feedback
  • Trade feedback
  • Customer feedback
  • Production statistics
  • Deficiency/warranty data
  • Market research
  • Financial results

Business excellence designed around the 3Ps will result in teams that are engaged, organized, and advantaged, and a customer experience that creates loyal promoters.